119-hr4098

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4098 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 4098

 To amend the Securities Exchange Act of 1934 to prohibit certain acts 
 by proxy advisory firms, and for other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 June 24, 2025

Mr. Fitzgerald introduced the following bill; which was referred to the 
 Committee on Financial Services

_______________________________________________________________________

 A BILL

 To amend the Securities Exchange Act of 1934 to prohibit certain acts 
 by proxy advisory firms, and for other purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Stopping Proxy Advisor Racketeering 
Act''.

SEC. 2. CONDUCT OF PROXY ADVISORY FIRMS.

 The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by inserting after 

section 14B the following:

``

SEC. 14C. CONDUCT OF PROXY ADVISORY FIRMS.

 ``

    (a) Prohibited Conduct.--It shall be unlawful for a proxy 
advisory firm to provide proxy voting advice if the proxy advisory firm 
possesses a conflict of interest, direct or indirect, including by--
 ``

    (1) providing consulting services offered directly or 
 indirectly through an affiliate to a registrant;
 ``

    (2) modifying a voting recommendation or otherwise 
 departing from the adopted systematic procedures and 
 methodologies of the proxy advisory firm or affiliate for the 
 provision of proxy voting advice based on whether a registrant, 
 or affiliate of the registrant, subscribes or will subscribe to 
 the services or products of the proxy advisory firm or any 
 affiliate of the proxy advisory firm;
 ``

    (3) providing proxy voting advice during any period of 
 time when the proxy advisory firm or any affiliate of the proxy 
 advisory firm is providing stewardship or engagement services 
 to a shareholder proponent, a non-issuer, a soliciting person, 
 or affiliate of any of the foregoing related to the matter 
 covered by the proxy voting advice; or
 ``

    (4) being a member of any organization that supports a 
 shareholder-sponsored proposal that is, or is substantially the 
 same subject matters as, the proxy voting advice.
 ``

    (b) Administrative Civil Penalties Available.--If the Commission 
finds, after notice and opportunity for hearing in a proceeding 
instituted pursuant to 

section 21C, that a proxy advisory firm violated 
subsection

    (a) , the Commission may, in addition to entering an order 
under 

section 21C, impose a civil penalty against the proxy advisory 
firm and any other person that the Commission finds was a cause of such 
violation. The determination to impose such a civil penalty and the 
amount of the penalty shall be governed by the standards set forth in 

section 21B.
 ``
            (c) === Definitions. ===
-In this section:
 ``

    (1) Consulting services.--With respect to a proxy 
 advisory firm or an affiliate of a proxy advisory firm, the 
 term `consulting services' means--
 ``
        (A) providing any non-public information with 
 respect to a proxy advisory firm's polices or ratings 
 methodologies;
 ``
        (B) any services designed to provide guidance or 
 advice regarding any corporate governance, 
 compensation, corporate social responsibility, 
 environmental, social, political, or other policies, 
 disclosures, or actions adopted by a registrant with 
 respect to--
 ``
            (i) any matter--
 ``
            (I) for which security holder 
 vote or consent is or will be 
 solicited; and
 ``
            (II) as to which the proxy 
 advisory firm makes or will make a 
 recommendation as to a security 
 holder's vote or consent; or
 ``
            (ii) matters included in or covered by 
 any written report or rating furnished by the 
 proxy advisory firm; and
 ``
            (C) such other services as the Commission may 
 determine.
 ``

    (2) Proxy advisory firm.--The term `proxy advisory firm' 
 means a person that markets the person's expertise as a 
 provider of proxy voting advice, separately from other forms of 
 investment advice, and sells such proxy voting advice for a 
 fee.
 ``

    (3) Proxy voting advice.--The term `proxy voting advice' 
 means any advice that makes a recommendation to a security 
 holder as to the vote, consent, or authorization of the 
 security holder on a specific matter for which the approval of 
 the security holder is solicited.
 ``

    (4) Registrant.--The term `registrant' means the issuer 
 of the securities in respect of which proxies are to be 
 solicited.''.
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